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Putin's aide seeks US$100m to rival China in bitcoin mining

Tue, Aug 08, 2017 - 9:56 PM

A company co-owned by one of President Vladimir Putin's internet advisers plans to raise the cryptocurrency equivalent of as much as US$100 million in a push to help Russian entrepreneurs challenge China in bitcoin mining.

PHOTO: EPA

[MOSCOW] A company co-owned by one of President Vladimir Putin's internet advisers plans to raise the cryptocurrency equivalent of as much as US$100 million in a push to help Russian entrepreneurs challenge China in bitcoin mining.

Russian Miner Coin is holding a so-called initial coin offering, where investors will use units of ethereum or bitcoin to buy new RMC tokens.

These new tokens will have rights to 18 per cent of the revenue earned with the company's mining equipment, according to a presentation posted on its website.

RMC plans to use semiconductor chips designed in Russia for use in satellites to minimise power consumption in computers for crypto-mining, Mr Putin's internet ombudsman, Dmitry Marinichev, said at at a news conference in Moscow.

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"Russia has the potential to reach up to 30 per cent share in global cryptocurrency mining in the future," Mr Marinichev said, adding that US$10 million from the proceeds of the ICO may be spent developing the processors.

More and more startups are offering tokens as a way to raise money upfront for digital assets in ICOs.

Unlike a traditional IPO in which buyers get shares, a startup's ICO nets you virtual tokens unique to the issuing company or network that grow in value only if the business proves viable.

The US Securities and Exchange Commission last month warned that ICOs may be considered securities and signaled greater scrutiny of the sector, though it stopped short of suggesting a broader clampdown.

Today's bitcoin mining requires special computers based on chips with minimized power consumption.

China's Bitmain Technologies is one of the leading producers of such equipment and also runs Antpool, a processing pool that combines individual miners from China and other countries.

Rival Bitfury Group, founded by Valery Vavilov, a Russian-speaking native of Latvia, produces equipment for mining virtual currencies and runs large-scale centers in Georgia and Iceland.

Russia has 20 gigawatts of excess power capacity, with consumer electricity prices as low as 80 kopeks (1.77 Singapore cents) per kilowatt hour, which is less than in China, RMC said in the presentation.

The company initially plans to locate mining computers based on Bitfury chips in individual Russian households to challenge Bitmain by using Russia's lower power prices.